Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture.

Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchangescanexpect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.

Total compensation and benefits at the publicly traded firms analyzed by the Journal are on track to increase 20% from last year's $117 billion -- and to top 2007's $130 billion payout. This year, employees at the companies will earn an estimated $143,400 on average, up almost almost $2,000 from 2007 levels.

But just because we need these banks to exist does not mean that we want these banks to make enormous profits.....

So the answer to the question Sorkin poses in the question is, essentially, “yes”: we don’t want Goldman to fail, and neither do we want Goldman to reward success in the way it has of late. What we do want is less excess and less systemic risk.

Allowing a super-sized Goldman to pay out untold billions in bonuses every year — even if they’re cleverly structured in the form of slowly-vesting stock — achieves neither of those aims.

Havn´t heard the word "moral hazard" for a long long time.....Unfortunately i think the following excellent cartoon from Gary Varvel is spot on.....

Speaking to financial executives last month, Obama said: “We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

At the same time, the president has promised to change Washington by keeping lobbyists for special interests at a distance and by making decisions in the open.

3 Comments:

Mish: Obama, Geithner, Congress, Bernanke, the Fed, central bankers in general, and foreign governments are all in the process of rearranging the chairs on the deck of the Titanic right now. Their solution is printing money.